China Unveils 'Trumpian' Tariffs On All Foreign Goods

Tyler Durden's picture

Having glad-handed with President Obama just this morning, and complained of a "sluggish global economy," that ironically his credit-fuelled mal-investment maelstrom enabled via its deflationary forces, Chinese President Xi appears to have moved on from currency wars to protectionism as WSJ reports China is tightening its grip on cross-border e-commerce, imposing a new tax system on all overseas purchases. While Trumpian tariffs are dismissed as crazy talk by America's establishment, it seems China took first-mover advantage to boost "Made-in-China" products at the expense of the rest of the world.

As The Wall Street Journal reports,

The changes, announced by the Finance Ministry last week, include raising the so-called parcel tax that is currently imposed on overseas retail products that e-commerce firms ship into China. On top of that, such goods sent directly to consumers will now be treated as imports and will be subject to tariffs and value-added and consumption taxes, whose rates vary depending on the type and value of goods.

 

The ministry said the changes, which become effective April 8, are intended to put foreign and domestic products on an equal footing. But industry analysts said the move seems designed to give a boost to “made-in-China” products and could dent a small, but growing market for foreign goods sold by Alibaba Group Holding Ltd., JD.com Inc. and other e-commerce players.

 

...

 

The new levies could dampen some demand, just as an increasing number of retailers world-wide are hoping to sell into China, says Charles Whiteman, senior vice president of client services for MotionPoint, a technology company that helps international retailers sync their e-commerce websites across languages and currencies.

 

“Increases in prices always have the effect of driving demand down,” but the effect will be “modest,” Mr. Whiteman said. “It probably won’t be too noticeable for branded products,” which consumers are willing to pay a premium for.

The changes in taxes come as the Chinese economy is slowing down and the deceleration is crimping tax revenues. Tax revenues grew 4.8% last year, compared with 7.8% in 2014. Beijing is looking for new sources of growth and revenue, and is trying to guide the economy to rely more on consumption and less on investment and industry. At the same time, Beijing is anxious to build up domestic businesses to provide jobs.

Calculating the impact of the changes on merchandise is difficult given that different categories of goods carry different rates. A company that sells infant formula milk, for example, will pay nearly 12% more in taxes if the sale is under 500 yuan because previous exemptions don’t apply, according to Mr. Tan, the analyst.

 

Luxury goods like jewelry will see extra taxes between 9% and 17%, while some levies on personal-hygiene and cosmetic products could fall since the changes rescind the previous heavier parcel tax on those products.

So President Obama - what will you do now? Perhaps Mr. Trump is worth talking to for some ideas?

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TradingIsLifeBrah's picture

If the rich Chinese want to launder their money out of the country with the fake purchase of foreign goods its only right that the government tax the hell out of them to stop it.  F them, maybe then citizens in other countries could actually afford to purchase a house in their home market.

LowerSlowerDelaware_LSD's picture

Ret the trade rar begin!

(This is just going to hurt their people with higher prices - as all tariffs do).

It's too bad that the U.S. government and consumer chased so much manufacturing out of the country to China.

froze25's picture

I wonder if the main stream media will even report on this? Trump 2016

SimplePrinciple's picture

We whallop their tire and steel exports.  They tax some of our e-stuff.  Seems a mild response, actually.

Handful of Dust's picture

I was reading the FleaBay and other e-commerce forums the other day for fun. The biggest complaints were about scammer Buyers [usually with Arab names] and the second complaint was about Chinese Mainland sellers undercutting everyone PLUS they get a special USPS discount so it's cheaper to ship a 1 lb item from Beijing to SF or NYC, then it is to ship the exact same item from somewhere like DFW.

 

Unless American e-commerce sellers sell something the Chinese don't have, they are going to face harsh times since they can sell [and ship] at much lower prices to USA customers ... then come back later and buy that $.5 million house in SF or Hongcouver.

I'm glad Soweto Obama has our backs.....

 

Gafaw...Gafaw...Gafaw....

Stuck on Zero's picture

The American response will be to ask for more bribes paid via Non-profit foundations.

sixsigma cygnusatratus's picture

"Unless American e-commerce sellers sell something the Chinese don't have..."

 

I'm going to sell my used copy of Fair Trade For Dummies...

Bazza McKenzie's picture

Smoot-Hawley is actually quite correct in this instance.  The reason S-H was a problem for the US was that, at the time, the US was a dominant exporter and in a world of tit-for-tat tariffs, the worst impact was on those who were previously the stronger exporters.  Net importers who erected tariff barriers actually benefited at the time.

So China today imposing tariffs will hurt China if other countries respond in kind.

Of course China has been imposing trade restrictions in one form or another for the last few decades and in the false name of "free trade" the US powers have refused to respond.  Trump will.

SimplePrinciple's picture

It is a common misconception that Smoot Hawley's high tariffs caused the USA damage primarily because of tit-for-tat responses by other countries.  In fact, Smoot Hawley dried up the supply of dollars to the world, which drove up the dollar, and thus the foreign currency price of US exports.

In modern times, the sudden disinterest by the Chinese in holding so many USTs should be the main factor weakening the dollar, especially to the extent other countries take their cue from China.  ZH has had the best coverage of this issue.  I would imagine the e-tariff on direct-to-consumer goods has its main effect on Chinese consumers.  Still, it shows a growing tendency toward protectionism that could end in a Smoot Hawley moment that pretty much knocked out international trade altogether.

If we do go Smoot Hawley, we will wind up having more oligopoly or monoply supplies of much of the stuff that is currently sold in competitive markets.  Unlike earlier days in US history, the plethora of rules and regulations facing small business is overwhelming and the crony socialism of the USSA would ensure a hard time for any new entrant.  Unions would have a field day.  Quality of US products would colapse, just like in the auto industry before the Japanese arrived.  Perhaps the transition would be necessary, especially if we want to hold one-world-government at bay, but it would be long and painful in the interrim unless we simultaneously overthrow crony socialism.

quadratic_equation's picture

I gave you a thumbs up because of your question.  But the answer is "NO".  All the establishment candidates and the media alredy said "it will raise prices of goods in the US" and "it will create a trade war".  But in reality those are just excuses  because they are getting rich of the imports and manufacturers are making a killing with cheap labor overseas and tax free imports and they don't want to change that.  Only Donald Trump is the true non establishment candidate and beholding to no corporate oligarchs and he's the only one who has told us many time that the rest of world has been taxing our meager exports.  $500 billion per year trade deficit with China this time it will be higher.

Handful of Dust's picture

I agree. Trump is very pro-American middle class and actually appears to be the only one.

ToSoft4Truth's picture

You just hit it, "already said".

 

The conclusion is they lie. 

We in Michigan are being told by Government Agents the lead in Flint water is no big deal.  Government Agents will not take responsibility.  Meanwhile, those very same Government Agents claim they'll now fix the problem.  The fix is these Government Agents will soon dole out contracts worth $100,000,000's of millions.  Thanks!

Trump is right. 

 

Listen to this chick's testimony bout her twins:

 

Flint Mother Gives Emotional Testimony of How Water Crisis Affected Her Children's Health

 

http://abcnews.go.com/US/flint-mother-emotional-testimony-water-crisis-a...

Escrava Isaura's picture

 

 

LowerSlowerDela..., The post above yours is right. Reagan did the same in the 80’s, even that the dollar was/is a reserve currency. China is after its oligarchs while protecting its markets. Chinese stock market and manufactures bottom line should do well.

US financials and real estate will get a hit. Inflation in the US will rise even that it’s not growing.

 

quadratic_equation's picture

Trade war has been ongoing since the beginning we just didn't realized that we the people are the casualty.  We've been doublecrossed by our government establishment and their corporate and banking cohorts.  They've made deals to export our manufaturing and jobs for cheaper product made overseas and we happily accepted it now, we don't even want to think about retaliating because as the pundits says "prices of goods will go up".

There's only one solution that is to tax all imports to the US and force the manufacturers back to the US when they feel the prices of their imports are too high and it's cheaper to manufacture back in the US.  GO DONALD TRUMP, he's the only candidate proposing to do this.

SixIsNinE's picture

www.truthfrequencyradio.com/x-radio-brooks-agnew-61798/ Proxy  Highlight

Jan 24, 2016 ... Truth Frequency Radio. Menu ? ... For Sale: China Buying Up American Businesses. To date, there have been 102 Chinese outbound mergers-and- acquisitions deals announced this year, amounting to $81.6 billion in value, ...

nice Brooks Agnew report - over $80 Billion China buyouts of US manufacturing , they are packing up the factory/manufacturing equipment and shipping back to china.  

Last year it was only $10 billion ish at this time ...

we're being neutered folks ... just like the rest "1st" world countries to make way for the NWO.

 

quadratic_equation's picture

The problem with your analogy is we are the one's getting hurt because our imports from China are tariff free s;o the rich Chinese manufacturer earns more money; meanwhile, our export to China is more expensive for the Chinese consumers.  So the effect is reverse the rich Chinese will actually have more money to buy US real estate.

skinwalker's picture

The chinese gov will do anything to maintain growth. Economic growth is the foundation of their legitamacy. "We will not let you have any voice, but keep quiet and we will make you rich". Unofficial social bargain. They don't hold up thier end, and it's a billion pitchforks. 

Citxmech's picture

"The Chinese gov will do anything to maintain the illusion of growth."

Fixed it.

Oldwood's picture

And so they aren't afraid of a trade war?? Huh??

Only America and that evil Trump can't tax imports.

I see.

fuck you vewie much

BandGap's picture

Raise "revenue" = raise taxes. These guys learn fast!

Money Counterfeiter's picture

Herbert Hoover found a new home.

Huckleberry Pie's picture

The Chinese black market is going to explode...they like cheap $hit, too.

Citxmech's picture

The entire global economy reminds me of one of those cars you see driving around squealing, rattling, and spewing oil vapor out the tailpipe.  You just know that POS won't last more than a month or two - but the poor slob driving it is just doing his best to pretend he doesn't see the toxic cloud he leaves behind at every light.

i_call_you_my_base's picture

Enjoy your domestically made infant formula, China.

Cheka_Mate's picture

"I love the taste of melamine in the morning!"

techpriest's picture

I thought those involved got the death penalty? Then again, when I travel over there relatives and friends of relatives are still willing to pay a premium for us to pack a case of formula.

Amish Hacker's picture

Wake me up when they start taxing foreign real estate purchases.

DownWithYogaPants's picture

Barry Obama likes to lead from Reggie's behind.

aztrader's picture

The price of that new Ferrari is going to be a bitch...........

Oldwood's picture

Like the Chinese weren't already tariffing the fuck out of imports. Give me a break. Every damned country in the world taxes our exports....and they keep telling us of the evils of protectionist tariffs. They keep warning us that they will tax our shit even more. FUCK THEM. Stop buying any of their shit...and by the way, all that FOOD we have been selling you...fuck that! Raise those import fees...bitches. MAKE   MY    DAY

quadratic_equation's picture

Because the establishment that's funded by the large corporations that are making $trillions on imports they bring free of tax into the USA while our manufacturing is decimated taking with it our means of making a living.  The corporations and the establishment are getting richer while the rest of us are getting poorer.

undertow1141's picture

And they won't stop til the piggy bank is empty.

quadratic_equation's picture

Trump is right tax imports to protect our industry and also bring back those manufacturing companies that move overseas when they realize it cost more to sell in the US their foreign made products than to manufacture them in the US.

Kirk2NCC1701's picture

The US will prosper better w/o China than with it.

Our 'need' is imaginary.  If we stopped buying their cheap crap, we'd not only have better quality products, but they'd be made here in the US.  The higher prices would be offset by all sorts of factors:

1. We invented modern Mfg.  China got a copy of it, thanks to US Design and Mfg engineers.

2. No oceanic shipping costs or delays.

3. Higher Quality = Lower Total Cost of Ownership over product life + Less Garbage/Recycling (better for Environment)

4. Higher prices = higher wages, if appropriate taxes are rebalanced

5. We keep US gold, coal and carbon fuels in the US.  We keep the wheat and corn, they go hungry.  The last country to have excess Carbon Fuels, renewable resources and clean water in 20-30 years, wins.

silverer's picture

Actually, China makes some excellent crap.  Unfortunately, the US doesn't make anything, not even crap. But don't leave it to the US politicians to do the right thing.  They never do.

Ward no. 6's picture

rubbish

yes the usa does make some things

electolux products (refrigerators, freezers, washers, dryers) are made in Saint Cloud Minnesota

i just recently had all custom made blinds for my house all usa made....

I am always buying something made in the usa

Lurk Skywatcher's picture

"3. Higher Quality = Lower Total Cost of Ownership over product life + Less Garbage/Recycling (better for Environment)"

So the American corporations who are the driving force behind current high turnover short shelf life engineered obsolesence economics are suddenly going to revert to making things that dont need to be replaced every 3 years simply because American jobs return to American soil? That genie is going to require more than the hand job you are suggesting to get rubbed back into its bottle...

I work with 60 year old American made machines every day, and no amount of tariffs and consumer pain short of a top down cull of TPTB will ever make that quality economically viable again.

SimplePrinciple's picture

 "I work with 60 year old American made machines every day, and no amount of tariffs and consumer pain short of a top down cull of TPTB will ever make that quality economically viable again."

That's what people overlook.  You don't get quality entrepreneurship and production out of socialism.  So to return to the quality of the past, you must convert USSA back to USA.  With the curriculums of brain mush our students have been fed for many years now, that won't be easy.  And TPTB will not take all their statist rules and regs and go gently into the sweet night.

nufio's picture

"if we stopped buying their cheap crap"

its not that they want to produce cheap crap. its being produced because it is being specifically asked for.

1. A lot of the automation in US factories actually come from germany. get off that fucking high horse. I love how armchair engineers like to take credit for work done by other engineers in some regional geography. its no different from rooting for a sports team and feeling eating popcorn is like scoring a touchdown.

i agree with 2 and 3

4. higher prices != higher wages. all avenues of production are comoditized, so wages purely depend on local markets. prices mostly are a function of demand and profits pretty much go to shareholders than labour themselves.

5. US Ag subsidies are extraordinary. why would US have any excess carbon fuels when every house has a tahoe and an escalde?

the.ghost.of.22wmr's picture

Give up their lucrative slave labor??

Not a chance.

Infield_Fly's picture

This is the issue that Trump dominates the crowd with.

 

The rest of the Washington crowd are children when it comes to matters such as these.

silverer's picture

Where does Apple land on this one? iPhone will surely cost more in China.  But China makes excellent phones in its home market, so the Chinese are probably OK with that.

balz's picture

"Excellent" and "China" in the same sentence doesn't feel right.

nufio's picture

as some poster in zh mentioned earlier, quality of products depend on the demand than the supply. the quality of a lot of the chinese made goods is low because the demand is for a price point where the quality will be low. if there was a demand for higher quality products china could easily produce those as well, like the iphone, macbooks, whatever. 

its asinie to think that anything chinese is of poor quality. If the demand for higher quality products increase the labor arbitrage of moving production to china is lower, hence production might become more local. Most of the china bashing on this site and in the US media is pure misdirection from the fact that price point of demand has gone down. for this look in the fucking mirror not across an ocean.

Oldwood's picture

People purchasing imports ultimately only have themselves to blame. Its not  lack of choices, just a lack of choices we like. We want it cheap and really don't care about our losses as we can blame someone else and get a check from the gubermint.

Anopheles's picture

China can and does produce world class products.  But you can expect to pay  world clas prices, less 20%, for those goods.  

You are only thinking of intentionally cheap retail junk, and not large products or wholesale goods that are made to a specific standard,  rather than cheap shit that's made to a specific PRICE.